Supreme Court Holds That Broad Covenants Not to Sue Divest District Courts of Jurisdiction to Hear Counterclaims for Trademark Invalidity

摘要

The U.S. Supreme Court has held that a sufficiently broad covenant not to sue can divest a federal court's jurisdiction to hear trademark invalidity counterclaims. In Already, LLC v. Nike, Inc., the Court held that a covenant not to sue issued by the plaintiff, Nike, Inc., after it filed suit against the defendant, Already, LLC, mooted Already's counterclaim to cancel Nike's mark. We believe the Supreme Court's holding will have relatively limited significance in trademark or patent litigation because of the unique fact pattern of the case. Nevertheless, the decision provides some guidance to intellectual property owners on how to terminate litigation, including invalidity counterclaims, if discovery reveals that the facts of a case are not what the IP owner understood them to be at the time of filing.